Google and Amazon slammed by MPs for “immoral” tax avoidance

MPs have criticised Google and Amazon for paying too little corporation tax in the UK and have slammed such activities as "immoral".

A report from the House of Common's Public Accounts Committee (PAC), after meetings with both companies, said using complex company structures and offshore tax havens was not defensible.

Coffee giant Starbucks also received criticism in the report but has since agreed to review its UK tax approach.

"Global companies with huge operations in the UK generating significant amounts of income are getting away with paying little or no corporation tax here. This is outrageous and an insult to British businesses and individuals who pay their fair share," said Margaret Hodge, PAC chair.

"The multinationals should be required to report their tax practices transparently. Prosecutions should be mounted where necessary and offenders should be publically named and shamed."

According to the PAC, Amazon generated £3.35bn of UK sales last year, which was a quarter of all its international sales outside the US, and hires 15,000 UK staff, yet pays "virtually no corporation tax".

Meanwhile Google's Irish tax haven recorded revenues of £396m in the UK, but paid corporation tax of only £6m.

The PAC said HMRC was partly to blame for allowing big businesses and their aggressive tax planning to escape without paying corporation tax. For example, the PAC said while HMRC had collected £4.5bn more tax this year than it had done in 2010 to 2011, there was a decrease in corporation tax revenue of £6.3bn.

The PAC questioned whether HMRC was giving lenient treatment to big corporations, many of them with head offices overseas.

"It must be more aggressive and assertive in confronting corporate tax avoidance. This is essential for the credibility of both the department and the tax system," said Hodge.

"Confidence in our tax system can only be maintained if every company and every individual is seen to be paying their fair share. That requires HMRC to act firmly now."

The PAC suggested that HMRC should improve its risk profiling of taxpayers by improving its business intelligence systems.